Example of linear progression

LN uses the linear progression method to compute the average projected inventory levels. For this method, LN assumes that the inventory level changes from one plan period to the next in a linear fashion.

Example

Inventory on hand = 10

Plan period	1	2	3
Length of plan period (days)	2	2	5
Projected inventory level (at end of period)	20	30	99

In this example, LN assumes the following projected inventory figures for (the end) of the day:

Plan period	1		2		3
Day	1	2	3	4	5	6	7	8	9
Projected inventory	15	20	25	30	43.8	57.6	71.4	85.2	99

The starting point is the inventory on hand, which in this context assumes the role of projected inventory at the beginning of plan period 1 (that is, the plan period in which the current date falls). In this example, the quantity on hand is 10. In two days, this value rises to 20 (the projected inventory at the end of plan period 1). The assumption of linearity implies that the inventory at the end of day 1 lies halfway between 10 and 20.

In plan period 2, the situation is similar.

In plan period 3, there is a rise of 69 in 5 days. In this period, linearity implies that each day a rise of 13.8 is assumed.